RCE Values and Coverage A

[ahl77]

Hi folks,

I'm a fairly new licensed agent so I have some "newbie" questions. This is one:

Sometimes, insureds come up with their own Dwelling value. It doesn't matter that you explain to them that the RCE for the specific carrier came way lower of what they want, they still want to stick to their numbers.
For me its fine, if that gives them satisfaction but...would the carriers mind they are being "over insured"?

In few words, I understand the carrier wont insure for less than their RCE, but would they have an issue if the dwelling goes over the RCE?

Thank you all in advance.

 

[flagent407]

As long as you've explained to the client that the insurance company is only going to pay the cost to reconstruct the home as it is today, then it won't hurt to make the client happy. This is assuming there is replacement cost on the dwelling.

Some companies are okay with you being around 15% above the RCE, but they will come back and request proof of upgrades if they feel the coverage is too high.

Just explain that to the client, they usually appreciate the education and honesty.

 

[F150]

Hi folks,

I'm a fairly new licensed agent so I have some "newbie" questions. This is one:

Sometimes, insureds come up with their own Dwelling value. It doesn't matter that you explain to them that the RCE for the specific carrier came way lower of what they want, they still want to stick to their numbers.
For me its fine, if that gives them satisfaction but...would the carriers mind they are being "over insured"?

In few words, I understand the carrier wont insure for less than their RCE, but would they have an issue if the dwelling goes over the RCE?

Thank you all in advance.

Simple, sit down with the client and do the RCE right there with them, then they cant argue much if its higher and you just showed them proof....

 

[Guest]

Hi folks, I'm a fairly new licensed agent so I have some "newbie" questions. This is one: Sometimes, insureds come up with their own Dwelling value. It doesn't matter that you explain to them that the RCE for the specific carrier came way lower of what they want, they still want to stick to their numbers. For me its fine, if that gives them satisfaction but...would the carriers mind they are being "over insured"? In few words, I understand the carrier wont insure for less than their RCE, but would they have an issue if the dwelling goes over the RCE? Thank you all in advance.

About 80% of my HO3's are new purchases and I have this conversation several times every week. Here is my advice. Never underinsure the house! According to my E&O people, they will sue and you will loose. My "trick" is to say, I understand what you are saying and I may agree with you. However, the CARRIER will not insure the house otherwise. If they won't insure it to the carriers requirement, walk away from the policy.. One policy is not worth an E&O claim. I almost always add the extra extended coverage of 20-25%. The short answer is blame it on the carrier and say your hands are tied... The customer always gives in.

Insuring the house over rce is no big deal, I do it all the time.

 

[ahl77]

Thank you all for your responses!!! Usually I run the RCE for the quote I will send to make sure I wont have issues at binding.
Also, agree with InsuranceBear, I would never try to insure a house for less than what the carrier estimates.

 

[Ashley Elizabeth]

Thank you all for your responses!!! Usually I run the RCE for the quote I will send to make sure I wont have issues at binding.
Also, agree with InsuranceBear, I would never try to insure a house for less than what the carrier estimates.

There are also tricks to bumping the coverage and downs slightly, as far as interior features. Companies such as Tower Hill will let you rate a pool and screened enclosure as attached and most companies normally do on their RCE, but there are a couple companies out there such as Security First who will make you rate s pool/screen as a detached structure. It can get complicated at times and frustrating especially when each company has their own RCE they like to use, but once you do it a few times and you get it down packed it becomes second nature.

Another important factor is to check with the lender on how much the loan is for because you don't want to place the dwelling at too high of an amount or too low of an amount and have to go back to make changes - creating more work for yourself. Also always explain to the customer that the amount the dwelling is insured at has nothing to do with the sales price or ehat they think its wirth, or the amount of insurance their neighbor carries- it is what it would cost to rebuild the home today up to code if it was destroyed.

 

[CKSINSURANCE]

From carrier's background, I know we do not want to grossly overinsure the building. the main reason is that this will create a moral hazard because CA is a valued policy state and company must pay the policy limit in the event of a total loss. I will be comfortable if the home is valued over the loan amount but below $200/SF based on my experience in most part of CA. San Francisco will be higher in the range of $250/SF.

 

[URDRWHO]

My problems are never about a client wanting to over insure, it is always about them not agreeing with the RCE. When needed I use two different examples of building costs.

If I had a client that wanted to over insure by a large amount, moral hazard would be blazing in my brain.